Gov. Gavin Newsom endorsed Proposition (Prop) 15 last week with the stated intent of shaking loose money to fund education but opponents say the property tax measure will devastate business owners.
If passed by voters on Nov. 3, the ballot initiative would change 40-year-old property tax protections.
“This is the single largest property tax increase on businesses,” said Gino DiCaro, senior vice president of communications and president of California Manufacturers Technology Association (CMTA) Service Corporation. “We understand the governor's position and his need to find revenues pretty desperately but we were disappointed in his support for the proposition. Our manufacturers can barely absorb these costs. So, we are definitely in opposition to this proposition.”
The ballot initiative would allegedly “improve upon” property tax reforms from 1978’s Proposition (Prop) 13 by limiting property taxes to 1% of purchase price and prevent annual increases from exceeding 2%. Currently, when a property is sold, it is reassessed at current cash value.
However, the Howard Jarvis Taxpayers Association (HJTA) perceives Prop 15 as an attack on Prop. 13.
“Our organization defends Proposition 13 because we think it's an extremely important protection for taxpayers,” said Susan Shelley, vice president of communications with HJTA. “Any attack on Prop 13 gets our immediate attention and this one is particularly harsh because it removes Prop 13 protection from properties that are used for commercial and industrial purposes.”
Some 94% of small business owners oppose Proposition 15, according to a National Federation of Independent Business (NFIB) study, and out of 15,000 NFIB members, only four percent support Prop. 15.
“It has the potential to devastate our manufacturing base,” DiCaro told the Southern California Record. “It may not result in a mass exodus because it doesn't generally happen that way. You'll have people making decisions not to grow anymore here, businesses that can no longer weather it at all and just stop operating and you might have a few that actually pick up and leave. It all happens in a variety of ways but there is absolutely no doubt that within maybe one generation’s time, this initiative’s passage will seriously impact California's 1.3 million manufacturing job base.”
The coronavirus has cost California agriculture some $2 billion in lost sales and opportunity while an estimated 94,000 jobs were lost because crops weren’t being brought in, according to a California Farm Bureau economic survey on the impacts of COVID-19.
California Farm Bureau President Jamie Johansson told the Southern California Record that during a pandemic is an inopportune time to vote in Prop 15.
“We lost half our markets when the foodservice and restaurants were closed down, which had a significant impact on farmers,” Johansson said in an interview. "It was estimated in May that by January 2021, the cost could be as high as $8 billion but we did not realize we would still be in this situation four months later so it's going to be an even bigger number in terms of the cost on agriculture. Prop 15 doesn’t just indirectly impact agriculture. It will also tax our processors, retailers and distribution centers and those costs get passed along either in lower prices to the farmers or high prices to the consumer.”